Fannie Mae And Freddie Mac: Cases For And Against Housing Recovery

The head of Toll Brothers (TOL) said the housing market could not get worse, but it has anyway. People were not even bothering to come and see the homes his company builds.

Those comments helped drive the market down nearly 3%, but the federal government will not rest in its efforts to make Mr. Toll appear silly.

According toThe Wall Street Journal, "Fannie Mae (FNM), Freddie Mac (FRE) and U.S. officials are expected to announce plans Tuesday to speed up the modification of hundreds of thousands of loans held by the housing finance giants."

The government program is on top of efforts by JP Morgan (JPM) and Citigroup (C) to provide their own help to tens of thousands of homeowners. These firms could be joined by Bank of America (BAC) and Well Fargo (WFC). At that point, well over a million homes which face foreclosure or late payment issues would be part of a massive homeowner retention effort by both the public and private sectors.

The programs, in combination, finally mark an all-out effort to put a foundation under home prices. If they work, and the bureaucracy underlying them could forestall their success for months. the rapidly deteriorating housing market could begin a slow recovery. To work its way though the new system these efforts may not make much difference until mid-2009, but that could be the bottom

Douglas A. McIntyre